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A pre-determined overhead rate is normally the term when using a single, plant-wide base to calculate and apply overhead. Overhead is then applied by multiplying the pre-determined overhead rate by the actual driver units. Any difference between applied overhead and the amount of overhead actually incurred is called over- or under-applied overhead.
Cost of goods sold (COGS) (also cost of products sold (COPS), or cost of sales [1]) is the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost.
In accrual basis accounting, the matching principle (or expense recognition principle) [1] dictates that an expense should be reported in the same period as the corresponding revenue is earned. The revenue recognition principle states that revenues should be recorded in the period in which they are earned, regardless of when the cash is ...
"FIFO" stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first (but this does not necessarily mean that the exact oldest physical object has been tracked and sold). In other words, the cost associated with the inventory that was purchased first is the cost expensed first.
Revenue recognition principle: holds that companies should record revenue when earned but not when received. The flow of cash does not have any bearing on the recognition of revenue. This is the essence of accrual basis accounting. Conversely, however, losses must be recognized when their occurrence becomes probable, whether or not it has ...
Cost of revenue is the total of all costs incurred directly in producing, marketing, and distributing the products and services of a company to customers. Cost of revenue can be found in the company income statement .
For the third year, our cost to date reaches 10,500, so according to PoC: Percentage completion = 10,500/15,000 = 70% Revenue = 70% of 12,000 – previously recognized = 8,400 – 6,000 = 2,400. However, because we are going to have a total loss of 3,000 on the contract..... we must recognize the total loss in the period it is estimated.
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes, and other expenses for an accounting period.